Learning Takes the Internet Route, 4 Stocks to Get a Boost

The coronavirus mess has brought the world to a standstill. The pandemic forced people to stay indoors, thanks to the social-distancing protocol. With schools and universities shut all across the world due to the COVID-19 outbreak, a new environment for online learning came to the fore. Per a recent ResearchandMarkets.com industry data, the global online education market is expected to be valued at $319 billion by 2025, rising from $188 billion in 2019.

Internet education already started to show significant growth even before the deadly contagion hit hard. Ease of grasping the lessons, higher retention rate and flexibility seem to change people’s perception toward e-learning. And now, with the sudden switchover from classrooms to virtual tutoring, there is a notable rise in the adoption of online-learning software and video-conferencing tools.

Education Sector’s Response to Coronavirus

Companies are ramping up their efforts to provide online learning platforms to meet the spurt in demand for virtual education. With net-based education gaining popularity among teachers and students alike, DingTalk, Alibaba’s BABA online learning and collaboration solution, was included in UNESCO’s list of distance-learning platforms. Meanwhile, a number of school districts are entering into partnerships, such as KCET and PBS SoCal with the Los Angeles Unified School District, to offer students tailored educational programs. Bitesize Daily, BBC’s learning program, imparts curriculum-based online lessons to kids. Furthermore, it will guide parents on home-schooling. “This is the biggest education effort the BBC has ever undertaken,” said General Lord Hall, director, BBC. He further stated that only this reputed broadcaster has the capacity to dispense such a comprehensive academic package.

Clearly, the pandemic acted as a key catalyst for redefining the educational system, shifting from the traditional ways of teaching. However, this unplanned transition to cyber learning with no sufficient training and little preparation might result in poor user experience. Students without reliable Internet connection or digital equipment find it difficult to participate in virtual learning.

According to a study by OECD, 95% of students in Switzerland, Norway and Austria have access to computers for their school work compared with a mere 34% in Indonesia. Referring to an article published by the World Economic Forum, while virtually all 15-year-olds from a privileged background in the United States could afford a computer, roughly 25% of those from disadvantaged background were unable to purchase one. Although some governments and schools are providing the required technology for less privileged students, like in New South Wales, Australia, concerns over the widening of the digital divide still loom large.

Nevertheless, it is quite clear that e-learning technology is bringing about an imperative change in the education system worldwide. Despite its shortcomings, distance learning could turn out to be more effective in coaching students and becoming the ‘new normal’ if we explore it to optimum levels.   

Best Bets

With online learning witnessing a huge spike in uptake and gauging investors’ strong appetite for stocks in that space, we zeroed in on four top bets that currently carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Career Education Corporation PRDO provides education to students in various career-oriented disciplines through online, campus-based and blended learning programs. It has a trailing four-quarter positive earnings surprise of 24.46%, on average. The company is presently a Zacks #1 Ranked player. 

K12 Inc. LRN, a technology-based education company, is a leading national provider of proprietary curriculum and educational services created for online delivery to students in the kindergarten through 12th grade or K-12. The company has a trailing four-quarter positive earnings surprise of 37.42%, on average, and currently has a Zacks Rank of 1. 

Headquartered in Santa Clara, CA, Chegg, Inc. CHGG operates a direct-to-student learning platform. It also allows students to find human help on its learning platform through a network of live tutors. The company has a trailing four-quarter positive earnings surprise of 49.85%, on average. It currently presently has a Zacks Rank #2. 

American Public Education, Inc. APEI is an online provider of higher education, focused primarily on serving the military as well as public service communities. Given the current market volatility wherein the coronavirus crippled most businesses including the education industry, American Public registered a record spring-term enrollment. The Zacks Consensus Estimate for current-year earnings has witnessed one upward revision in the past 60 days. The company holds a Zacks Rank of 2 at present. 


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